Will Uber take away Worcester's cab business?

If you never take cabs, then you may never have heard of Uber or Lyft. But these strange-sounding words could be a mortal threat to the local cab industry.

And with Uber hungry for growth, it is targeting Worcester. That is not something that sits well with Worcester Green Cab.

Uber is a very highly valued service at work in Boston, New York and London that turns almost anyone with a car into a potential taxi driver. Uber and other ride-sharing companies use phone apps to let drivers sign up to transport customers looking for a ride. Uber does not hire drivers; it contracts with people who use their own vehicles.

Although Uber is taking business from traditional taxi services, it is not required to comply with local, state and national regulations.

Worcester Green Cab is no fan of Uber, which takes market share from traditional cab companies. The barriers to entry for business is lower, since Uber's drivers don't have to invest in a medallion as do traditional cab companies. For example, in New York, taxi medallions "continue to trade for $1 million-plus," according to The Wall Street Journal.

The pitch for regulators to shut down this unwanted rivalry is that Uber conducts illegal activities, neglects responsibilities and exploits loopholes.

Green Cab owner Adarsh Oberoi said, "Uber would not be good for the taxi business in Worcester. It will steal customers from Worcester cab companies, as it has done in cities around the country. Uber will take jobs from Worcester's cab companies. It uses unlicensed drivers. If driving a taxi was that easy, why would we need medallions?"

Indeed, there are Uber horror stories, but it is not clear whether there are more or fewer such stories for traditional cab companies.

On Feb. 14, the Chicago Tribune reported that Uber wasn't performing criminal background checks on all of its drivers. The company had missed the felony conviction of one of its drivers. Uber apologized.

The month before, San Francisco sued Uber when a driver hit and killed a 6-year-old girl. Uber said its driver had not been providing Uber services at the time of the accident.

Uber is not completely free of regulation. In New York, Uber operates as a commercial carrier, meaning drivers are commercially licensed and must register their vehicles with the state.

Uber is certainly controversial, but it is also making investors rich.

In June, Uber said it raised $1.2 billion from "institutional investors, mutual funds, private equity and venture capital." The June round of financing valued Uber at a total $18.2 billion. To put that in perspective, one of Worcester County's most valuable publicly traded companies is Milford's Waters Corp. with a value of $8.6 billion.

Business Insider reported that 2014 revenues for Uber, a private company, were estimated to hit $10 billion. It gives 80 percent of that to drivers, so Uber's net revenue could hit about $2 billion this year.

My conclusion is that Uber would be good for Worcester because it would be used by people who live outside the urban part of Worcester who need a cab to get home, maybe after a late-night party.

But Worcester should regulate the drivers to make sure that they are upstanding citizens with good driving records and well-maintained vehicles. If that happens, then consumers will be better off and Worcester Green Cab and its peers will feel the pressure to adapt.

Peter Cohan of Marlboro heads a management consulting and venture capital firm, and teaches business strategy at Babson College. His email address is peter@petercohan.com.